TMI Blog2017 (4) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... anges in between 1% to 2% in this line of business. Such an issue will differ on case to case basis. The AO has not made reference to any other assesses. More so, when the assessee has established business, he might not be required to pay commission, but a new entity in the process of its establishment might have paid higher rate of commission. The ld.AO failed to give any specific defects. The reference to market rate of commission has no bearing to test the genuineness of the expenditure incurred by an assessee. The ld.CIT(A) has rightly appreciated the circumstances and rightly deleted. As far as salary expenses are concerned, the ld.AO was of the view that the assessee was not required 21 employees. Again we are of the view that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do not find any merit in these grounds of appeals. They are dismissed. - ITA No.1714/Ahd/2013 - - - Dated:- 3-4-2017 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For The Revenue : Shri Albinus Tirkey, Sr.DR For The Assessee : Shri Sapnesh Sheth ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Revenue has come up in appeal before the Tribunal against order of the ld.CIT(A)-III, Surat dated 5.3.2013 passed for the Asstt.Year 2009-10. 2. The Revenue has taken five grounds of appeal, out of which ground nos.4 and 5 are general grounds of appeal, they do not call for recording of any specific finding, and hence they are rejected. In ground no.1 to 3, Revenue has challenged deletion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 5. Before us Revenue is only challenging deletion of ₹ 31,78,965/- out of commission payment; ₹ 13,49,415/- out of salary expenses and ₹ 10,61,008/- out of partners salary. Before adverting to the facts highlighted by the AO for making these disallowances and reappreciating order of the ld.CIT(A) for deleting these disallowances, we would like to bear in mind certain basic principles required to be applied whenever an adjudicating authority is being called to appreciate the allowance and disallowance of the expenditure claimed by the assessee for its business purpose. It is pertinent to observe that in order to claim expenditure under section 37(1) of the Income tax Act, the assessee is required to fulfill certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the CIT Vs. Dalmia Cement Ltd., 254 ITR 377. An expenditure to which one cannot apply an empirical or subjective standard is to be judged from the point of view of a businessman and it is relevant to consider how the businessman himself treats a particular item of expenditure. The term commercial expediency is not a term of art. It means everything that serves to promote commerce and includes every means suitable to that end. In applying the test of commercial expediency, for determining whether the expenditure was wholly and exclusively laid out for the purpose of the business the reasonableness of the expenditure has to be judged from the point of view of the businessman and not the Revenue (see CIT v. Walchand and Co. (P.) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition laid down by two decisions viz. in the case of Voltamp Transformer Pvt. Ltd. and CIT Vs. Dalmia Cement Ltd., (supra), we find that the assessee has filed confirmation. It has disclosed various details of commission recipients; it has disclosed sales made through such persons and also disclosed rate of commission. In other words, the assessee has submitted complete basic details. The ld.AO has re-appreciated these details, but he could only point out defects in the details. He disallowed the commission payment on the basis of general practice i.e. commission payment ranges in between 1% to 2% in this line of business. Such an issue will differ on case to case basis. The AO has not made reference to any other assesses. More so, when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graduate. The AO has drawn inference without anything on record. On due consideration of the above facts and circumstances, we are of the view that the ld.CIT(A) has rightly deleted the disallowance. It is also pertinent to observe that salary to the partner is being regulated by the provisions of section 40(b) of the Income Tax Act. It is to be paid in accordance with the provision stipulated in the deed which should be in commensurate with the provisions of section 40(b) of the Income Tax Act. On such salary payment, provisions of section 40A(2) cannot be invoked. On due consideration all the facts, we do not find any merit in these grounds of appeals. They are dismissed. 8. In the result, the appeal of the Revenue is dismissed. Or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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